The Recording Industry Association of America (RIAA) is well known as an organization that targets individuals it believes has committed an act of piracy, and then demanding they pay thousands of dollars to settle. But the business sense of carrying out such action doesn’t seem to exist if you look at the expenditure and income of the RIAA.

Website Recording Industry vs The People has posted a summary of the RIAA’s figures for 2008. It may be a couple of years old, but the information is still telling. The RIAA’s top three contractors were law firms acting on their behalf in order to recover damages for copyright infringement. The problem is, their combined bills totalled in excess of $16 million, while the damages recovered totalled merely $391,000.

If you look back to 2007 the situation is even worse. $24.5 million was spent and $515,929 recovered. 2006 was similar with $22.6 million spent and $455,000 recovered.

One has to wonder how long such expenditure is sustainable taking into account all the other costs the RIAA must incur throughout a year?

As is pointed out in the HN comments, the RIAA is not just about recovering damages from copyright infringement. It is expected that by taking action, and being seen to do so by the general public, piracy will be cut. That in turn will improve profitability for the media companies the RIAA represents.

The thinking is that $16 million in legal fees might generate multiple millions in additional revenue with the damages being inconsequential. I have yet to see any evidence that supports such thinking, however. In fact, that would be very difficult to prove either way.

The high costs of legal action from the 2006-2008 period has already seen a change in the tactics of the RIAA. At the end of 2008 the organization decided to end mass litigation and start working with ISPs.

I guess you could view the RIAA as a multi-million dollar scare tactic to get you to buy legal goods, but its not the action they take against individuals that worries me. It’s more the attempts to implement new laws which mean more monitoring and less privacy for everyone.

Reader Comments

Steve B

I admit that in the years past I used the original Napster, then KaZaa and even a bit of LimeWire when it first came about. I did so because I did not at the time see it as wrong. My thinking was “wow, all my songs without having to buy CDs”. Then I started saw Napster shut down, KaZaa and LimeWire were filled with garbage and sabotaged files. Then they both were put on the chopping block. I haven’t used such P2P services in years. I don’t see the need anymore. I also realized I was in the wrong for using those services. I now subscribe to the New Napster. I am perfectly content with that. I pay a yearly subscription fee (you can choose montly) and I get a certain allotment of songs and I can also buy the MP3s for a very reasonable price if when my allotment runs out. The reasonable price is a big thing and the other half of the equation there is being able to put the said songs on my own MP3 play or move them to my smartphone that has a music player built in. I’m happy that I know I’m doing it legal and I am happy to continue to do so.

What I said above should easily point out to the RIAA and their cohorts that if you supply a decent and reasonably priced method to obtain and listen to music, people will go legal as it were. These lawsuits are fruitless because as its pointed out, they spend millions and get less than a million in return. Most people they sue don’t have the money to pay any of the fine. So the RIAA has spent tons of money in legal proceedings and can’t get anything in return. Personally, the attitude of the RIAA and even MPAA…makes me feel they need to just disappear and replaced with organizations that know what they’re doing.

Tall Timbers

When they started talking about anti-piracy protection for music cds way back when, I stopped buying music. So for years I’ve lived with my collection of 1000’s of songs that I bought and paid for. I have the cds in storage, all the songs have been converted to MP3’s and are available on my computers. I can select titles and burn them onto a cd to play in any device I choose. I used to purchase quite a bit of music, now… none. I’ve never been a music pirate. I’m one example of anti-piracy efforts costing the music industry outside of the courtroom.

hodar

Re: Tall Timbers

Me too. I own ~350+ CD’s and have ripped them all to my PC. The fact of the matter is that the RIAA has no quality product that I want to purchase.

When cassette tape players were in vogue, I made ‘Road Tunes’ tapes using LP’s from roommates and friends. This got me exposed to groups that I had never heard of before (REM, Mannheim Steamroller, Alan Parsons Project, ect) – this was in the early 80’s. Since then, I have purchased pretty much every album these artists have made.

Now that it’s a crime to download, or copy these materials – I just listen to my songs I’ve paid for. Now my disposable income is spent on DVD and games for the Wii, PS3 or XBox360. The RIAA isn’t seeing a dime from me, and won’t for the forseeable future.

What they have failed to grasp is that their variety of artists is down by over half from what they had in the 70-80’s, their quality of product has dropped, and there are competive markets that did not exist 20-30 years ago. Why buy a CD for $20 when I can buy a DVD? Or a computer game, or an App for my cell phone? And with Apps like Pandora – why buy the music at all?